Cost of College

07/20/2013

As you probably know, your first step in applying for financial
aid will be to provide key info about your family’s finances on the FAFSA.
This document will have a short “shelf life”: you’ll have to complete a new FAFSA
for every year for which you wish to be considered for aid. Unless you start
college early or late, the first FAFSA you’ll complete will include your
family’s financial info for the calendar year spanning the second half of your junior
year and the first half of your senior year.

On a positive note, $6,130 is a substantial sum for a
full-time student; you’re unlikely to earn this much in a summer job. However,
if you also work part-time during the school year, a summer job might push your total income for the
year past this mark.

If you can control the amount that you work—i.e., if your
family isn’t counting on your income to make ends meet—you might not want to
work past the point that you earn $6,130 if it is a year that will be
documented on the FAFSA. As stated above, colleges will be expecting you to give
them half of what you make past this amount.

Fortunately, once you’re in college, you won’t have to worry
about any money you might make through a work-study
job. This money won’t count as income when you complete the FAFSA (it will count
as financial aid); as such, you don’t have to worry about it putting you above
the $6,130 cut-off.

Click
here to read more on the College Solution blog. For more detailed information
on how to apply for aid and fill out aid applications (e.g., the FAFSA) to your
best advantage, check out our Paying
for College Without Going Broke guidebook.

07/10/2013

Would you be willing to give up a small percentage of your
post-graduation earnings if it meant that you wouldn’t have to pay tuition
or take out student
loans?

Oregon lawmakers believe most of their state’s residents
would say “yes” to such a proposal.

As reported by the New
York Times, Oregon legislators recently passed a bill that would switch
the state’s public
colleges and universities to such a payment model. John Kitzhaber, Oregon’s governor,
is expected to sign the bill into law.

It’s a significant change from the traditional model of
paying for college, one in which families pay schools up front, either out of pocket
or from loans. In this new model, colleges don’t get anything at first; they
are “paid back” after their students earn a degree.
The fact that payments are income-based (most likely about 3 percent of income,
for 20 years) means that colleges get paid based on what their alumni
earn; this prevents scenarios in which former students earn little but owe
much. It’s very similar to the income-based
repayment plans for student loans, but simpler in that the money is paid directly
to the school rather than a third party.

It should be noted that this plan comes from current college
students. Students who took Portland State University’s “Student Debt:
Economics, Policy and Advocacy” course
in fall 2012 made this model their project for the semester.
Earlier this year, they presented the model to state legislators, who, in turn,
drafted the recently passed bill.

However, despite these fixed expenses, being a college
student routinely costs more than families think it will.

A recent U.S.
News article takes a look at why this is the case. One big culprit is
unplanned personal expenses (e.g., meals in restaurants). Another is inflation
(e.g., when the price of gas increases, transportation costs immediately go up
for students who drive.)

It is best to have extra funds in your personal budget and
then—this is key—live as if you do not have
these extra funds. If money is left over at the end of the semester, it can
become extra cash for your holiday shopping or summer break.

On that date, the loan’s interest rate is
scheduled increase from 3.4 to 6.8 percent. (Click
here for additional info.) The only way this won’t happen is if Congress strikes a deal between now and then to
prevent it from happening.

It’s hard to feel good about this. Most
of the students who qualify for the subsidized Stafford Loan are Pell Grant
recipients—i.e., their families don’t have much money. Why make it more
expensive for them to go to college?

Fortunately, even if the scheduled increase does happen, it
doesn’t have to be a deal-breaker. According to StudentLoanNetwork.com,
the increase will translate to less than $50 a month in additional repayments,
even if the borrower takes the maximum Stafford Loan.

05/29/2013

Families can reduce the taxes they owe—and give their higher
education savings a boost—by putting money for future college
expenses into a “529” plan.

Named for
the relevant section of U.S. tax law, 529
plans fall under two basic categories: “prepaid” plans, in which families pay
for future college
credits at today’s rate, and “savings” plans, in which families invest money
for future college expenses. (Click here
to learn about the pros and cons of each type of plan on StudentLoanNetwork.com.) While these plans are
sponsored by individual states, many of them are open to all U.S. citizens.

Each year, the 29th of May (i.e., 5/29) is a sort
of “529
awareness day”; to mark it, many states offer special incentives to entice
families to enroll in 529 plans. Click
here for more info on Forbes.com.

05/24/2013

In the realm of college expenses, books don’t get as much attention as do other costs, such as tuition
and housing.

However, it’s an expense that can easily add up to $1,000 a
year or more—a substantial amount given that most students pay for books “out
of pocket.”

Fortunately, there are several different ways
you can reduce the cost of books and keep money in your pocket. StudentLoanNetwork.com
recently posted a great summary of these strategies—click
here to check it out.

05/23/2013

According to new
survey by Fidelity Investments, half of this year’s college graduates were
surprised by the amount of debt they accumulated while in school.

Just how surprised? The survey found that almost 40 percent of
grads would have done things differently—e.g., chosen a different college, or
found additional ways to control costs—had they better understood the debt they
were incurring.

05/10/2013

For these students, the realization that they’ll have to go elsewhere for financial reasons can be disappointing. Fortunately, it doesn’t have to stay that way for long.

In the Boston Globe, a current college student recently discussed her decision to attend her safety school, and her happiness with this decision in the subsequent years . . .

My dream school seemed glamorous, and I was upset that money could keep me from pursuing anything I wanted in life. What I didn’t realize is that the school you attend doesn’t matter—you will get out of college as much as you put into it.

Click here to read more of this student’s story. The main gist of it? Many different colleges can end up being the “right college” if you approach the experience with a positive mindset.

05/02/2013

Most people believe it takes a fair amount of luck to get a totally
free college education. They say you’ve got to win many different scholarships,
or you’ve got to have the considerable good fortune to land one of the rare
“free rides.”

They might not know that several U.S. colleges are currently
tuition-free to all of their
undergrads.

While one of these schools—Cooper Union, an architecture,
art, and engineering school in New York City—has
recently announced that it will soon begin charging tuition, the others are
continuing to offer “free” degrees to bright and hard-working students. The
New York Times recently identified several of these schools, including
the following:

Berea College: a 1,600-student school in central
Kentucky that requires students to work 10 hours a week

College of the Ozarks: a 1,400-student Christian
school in Missouri that requires students to work 15 hours a week

Deep Springs College: a 28-student two-year
school set on a ranch in rural California

Webb Institute: a 100-student school on Long
Island, New York devoted to naval architecture and marine engineering

04/22/2013

If you’re a college applicant and you haven’t yet decided
among your acceptance offers, you might feel as if your upcoming decision will substantially
and permanently determine your path in life.

This feeling might be particularly strong if you’re deliberating
between two dissimilar options, for example . . .

a school with a recognizable “brand name” but a hefty
price
tag (one that would require you to take sizable student
loans) and

a school with less prestige but a more manageable
price tag (one that would entail substantially less debt).

Prestigious schools can be wonderful places; however, you cannot
assume that going to one will land you a better-paying job and, in the
end, make you “better off” financially. As the New
York Timesrecently noted, “few high school seniors really know what
they want to do and, by extension, what they will earn” later in life. A school
that would place a heavy financial burden on you and your parents is tough to justify.

However, as the Times
pointed out, many students feel they have little choice in the matter. They
believe that, in a weak economy, a degree from a prestigious school is the only
path to a “good” job.

A recent post from the College
Solution addresses this concern. It features the perspective of a recruiter from a “very selective federal agency” that draws from a wide variety of
institutions—“small exclusive liberal arts schools, less selective small
schools, large state universities, historically black colleges, work colleges,
women’s colleges, some Ivy Leagues, some public Ivies, etc.” Click
here to check out her perspective.

In sum, you shouldn’t feel as if you must attend a
well-known college if you’ve received an offer from one. (Such an offer isn’t a
winning lottery ticket.) Regardless of where you decide go to college, you will
continue to prove yourself once you get there. As you work hard in college, you
will become the type of person employers want to hire.